India's Aviation Monopoly: How One State Banned All Airlines Except Its Own

In a move that has sent shockwaves through India's aviation industry, the state of Sikkim has effectively created a monopoly by banning all private airlines from operating within its borders, allowing only the state-owned carrier to serve its sole airport. This unprecedented decision raises serious questions about fair competition, passenger choice, and the future of regional aviation in India.

The Sikkim Situation: A State Takes Flight Control

Sikkim, nestled in the Himalayas between Nepal and Bhutan, operates India's highest airport at Pakyong, situated at an altitude of 4,500 feet. Since its inauguration in 2018, the airport has become the center of a brewing controversy that pits state interests against market competition.

The state government has restricted operations to Alliance Air, a subsidiary of Air India, effectively creating India's first "one-airline state." This decision means that major private carriers like IndiGo, SpiceJet, and Vistara cannot operate scheduled services to and from Pakyong Airport, leaving travelers with limited options and potentially higher fares.

The Justification: Safety First or Protectionism?

State officials defend the policy by citing safety concerns unique to Pakyong Airport's challenging terrain and weather conditions. The airport's short runway of 1,750 meters, combined with its high altitude and mountainous surroundings, requires specialized training and aircraft certification that not all airlines possess.

"The topographical challenges and unpredictable weather patterns demand exceptional pilot expertise and aircraft specifications," explained a senior Sikkim government official. "We cannot compromise on passenger safety for the sake of competition."

However, aviation experts argue that these safety standards should be uniform across all carriers rather than used as grounds for exclusion. Captain Mohan Ranganathan, a aviation safety consultant, notes: "If safety is the concern, then establish clear operational standards that all airlines must meet, rather than creating arbitrary barriers to entry."

Economic Impact: Winners and Losers

The monopolistic approach has created a complex economic landscape. While Alliance Air enjoys protected market share, passengers face limited scheduling options and potentially inflated prices due to lack of competition.

Current data shows that airfares to Sikkim are approximately 40-60% higher than comparable routes in other northeastern states where multiple carriers operate. A typical Delhi-Pakyong flight costs ₹8,000-12,000, compared to ₹4,000-7,000 for similar distance routes with competitive pricing.

Local tourism stakeholders report mixed results. While some appreciate the reliability of having a dedicated airline service, others worry that limited flight options and higher costs could deter potential visitors to Sikkim's pristine landscapes and Buddhist monasteries.

Industry Pushback and Legal Challenges

Private airlines have not remained silent on this issue. IndiGo, India's largest domestic carrier, has formally requested permission to operate services to Pakyong but has been denied without clear technical justification. The airline argues that it operates successfully at other challenging airports across India, including those in Kashmir and the Northeast.

Legal experts suggest that Sikkim's policy may violate India's competition laws and the principle of free trade between states. The Competition Commission of India is reportedly examining whether this constitutes an abuse of dominant position by a state entity.

"This sets a dangerous precedent," warns aviation lawyer Rohit Sharma. "If one state can unilaterally decide which airlines can operate, it undermines the federal structure of Indian aviation and could fragment the national market."

The Broader Implications

Sikkim's one-airline policy reflects broader tensions in Indian aviation between state control and market liberalization. While the central government has pushed for privatization and competition, some state governments remain protective of their regional interests.

This approach contrasts sharply with global best practices, where airport slots and route permissions are typically allocated based on technical capabilities and safety standards rather than ownership structure. Even challenging airports like those in Bhutan or Nepal accommodate multiple international carriers under strict safety protocols.

Looking Ahead: Reform or Replication?

As India's aviation sector continues its rapid expansion, the Sikkim model raises critical questions about the balance between state interests and market dynamics. Will other states follow Sikkim's lead, potentially fragmenting India's aviation market? Or will federal intervention and industry pressure force a return to competitive principles?

The resolution of this dispute will likely set important precedents for regional aviation policy across India. For now, travelers to Sikkim must navigate the realities of limited choice while the broader industry watches to see whether competition or control will ultimately prevail in the clouds above the Himalayas.

The stakes extend far beyond one small state – they touch the very future of how India manages the delicate balance between regional autonomy and national market integration in the skies.